Should I Buy Ripple or Stellar Lumens?

Ripple (XRP) and Stellar (XLM) are two cryptocurrencies that have been soaring in recent weeks, but many investors are unclear about which of the two offers the highest potential return over the long term. The two assets have many similarities, but also some key differences.

This article will compare the strengths and weaknesses of Ripple and Stellar Lumens so you can make an informed investment decision.

What are these Protocols Designed to Do?

Both Ripple and Stellar are designed to be cross-border settlement systems people can use to transfer units of value. They can also be used as a platform for decentralized application development and ICOs. Stellar split away from Ripple in 2014.

So which one is the better investment for newcomers? There are three things we need to analyze: market-cap, dilution, and scalability.

1. Market Cap: Stellar Lumens Wins

The smaller something is, the less force is required to move it. But when analyzing investments, you should always pay attention to the market cap instead of the price. Ripple coins trade for only $2.22 each right now, but the total market cap is almost $86 billion, which is huge.

10x returns from here are unlikely, because that would require Ripple's market cap to soar to an unrealistic number, assuming the total number of coins in circulation remained constant.

Stellar Lumens, on the other hand, trade for less than $0.50 each and represent a market cap of less than $9 billion. It will take much less force (buying) to send the price of Stellar skyrocketing, and 10X returns are realistic because they would put Stellar's market cap right around where Ripple's is right now.

2. Dilution: Ripple Wins

Despite, Stellar having the more attractive market cap, Ripple will experience less dilution. The total amount of Ripple coins is circulation will constantly decline - likely bosting the price of the coins you own.

3. Scalability: You Decide

Ripple and Stellar are targeting different markets for their payment and settlement networks. While Ripple focuses on big financial institutions, Stellar focuses on individual users who may want to send payments across borders - this is something that would be very useful for remittances in developing countries.

Which one will scale better? You decide.